Corporate Governance Standards in the European

Transcript:Corporate Governance Standards in the European:
Corporate Governance Standards in the European Union About EuropeanIssuers EU trade association - we aim: To represent to EU policymakers the common interests of EU quoted companies as users of financial markets To ensure that the EU creates a regulatory environment in which these companies can raise market capital and deliver growth 2 What will speak about Emerging equity gap & changes global economy Kay Report UK equity markets and implications EU corporate governance - definition, content, other relevant areas Legislative & industry developments What are we trying to achieve? 3 The emerging equity gap McKinsey Report - Growth and Stability in the new investor landscape Share of equity in global financial markets could fall from 28% to 22% by 2020 Costs of equity will rise while banks have rising needs for equity (and implicit guarantees) Ageing in Europe means increased need for savings and investments but dislike of risk Governments likely to push risk of savings onto companies and individual savers 4 The emerging equity gap OECD reports: The world is producing only one third of the IPOs as 20 years ago (over 2000 in early 1990s to less than 750 in 2012) US markets have experienced 15 years of consecutive listing losses EU IPOs are also badly hit. Over 2008-2012, only 6 out of the top 26 IPO markets were in the EU Asian markets produced 7 times as many IPOs in the same period 5 Kay Review of UK Equity Markets "Equity markets today should primarily be seen as a means of getting money out of companies rather than putting it in" New equity issuance has been negative over the last decade and obtaining a listing is no longer a natural step in the development of a new business smaller, mostly newer businesses have found it particularly dıfficult to access funding since the financial crisis - public offerings are rarely the exit route of choice for investors (6% IPOs v 50% trade sales) 6 Kay Review of UK Equity Markets Costs of equity are high by historical standards and in absolute terms Regulators tend to measure the wrong things e.g. the breakdown of costs of trading an individual share but not the costs of buying and holding the same share Length and complexity of the chain means more complexity and less understanding Active ownership is discouraged by current market structures 7 Relevant implications Securities markets are expensive